Newsletter

Editorial: Drilling rigs producing optimism

While there’s probably never a bad time for an oil boom in Kansas, the one producers are expecting in the south-central part of our state comes at an especially opportune time.

The state’s economy has been showing signs of recovering from the recession, but a big boost from the oil industry would certainly speed up the process and perhaps carry Kansas to new heights as a player in the energy game.

Investments already made in mineral rights coupled with the drilling activity now and in the future, oil production, the jobs and spinoff benefits add up to a lot of money for a state in need of an economic lift.

May the drilling rigs find the oil they’re searching for in sufficient quantity to keep them, and the pumps, in motion for a very long time.

The crude drillers are seeking so diligently now lies in the Mississippian Lime formation about 5,000 feet below the surface. Much of the drilling is occurring in Barber and Harper counties but is expected to spread north across central Kansas. That oil has been found in the lime formation in other states, including Oklahoma, only increases confidence in the exploration here.

Producers appear confident, as evidenced by the money they’re investing, that the oil is there and can be recovered.

Already, one company has spent millions purchasing mineral rights in Kansas and plans to spend $700 million this year in developing its mineral rights in Kansas and Oklahoma.

The company plans to drill 50 wells in Kansas and this year and perhaps hundreds next year.

Drillers are relying on hydraulic fracturing, commonly known as fracking, and horizontal drilling to pull oil and gas unreachable with other methods from the lime formation. Fracking involves pushing fluid and sand down a hole to open up natural fissures in the rock and allow the oil to flow.

Opening up oil fields requires a lot of drilling rigs and workers. Predictions are the drilling will create hundreds of oil patch jobs paying about $50,000 annually. Granted the work is hard, but that kind of money should generate applicants for the available jobs.

Gov. Sam Brownback calls the potential boom “an exciting opportunity” to grow the state’s economy while securing greater energy independence for the country. It means more jobs and revenue here, he says.

It also could mean a lot of dollars for the state’s coffers in the form of severance taxes, a tax levied on the production of minerals as they are “severed” from the ground.

It worth noting that Brownback, when proposing major changes in Kansas’ corporate and personal income tax codes earlier this year, didn’t recommend reductions in the severance tax.

If, indeed, the oil flows as freely and as long as some think it might from the Mississipian Lime formation in Kansas, state government might be able to reduce its reliance on the income and sales taxes.

That said, it should be noted that Brownback’s tax reform has yet to pass through the legislative process, where it is being reshaped by legislators.

Also, some are being cautious about predicting great things from the current exploration.

The president of the Kansas Independent Oil and Gas Association says its people are excited and hopeful but don’t want to overstate the possibilities.

Neither do we, but the money already spent on mineral rights and drilling activity by people who have been playing the game for a long time certainly gives us cause to be optimistic.